2010 Global Market Report - NAI Commercial Real Estate

Colorado Springs, ColoradoDenver, ColoradoContactNAI HighlandCommercial Group, LLC+1 719 577 0044Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage Income632,079688,728298,947$70,092The economy for the Colorado Springs market has deterioratedsomewhat since year-end 2008. Troop increases atFort Carson, coupled with Department of Defense spendingat five military installations, plus defense contractors, havebeen a significant stabilizing force on the economy andprevented it from slipping further. The 12,000 troop increaseat Fort Carson through 2011 will add 30,000 people to theColorado Springs population.Citywide, Class A office vacancies are 18.5%, up from2008's 13.1% and the vacancy rate in the CBD is 9.5%, upfrom 8.6%. Asking rates are down $0.18-$0.28/SF and thestrike rates on completed deals are well below asking rates.Year-to-date absorption citywide is 242,234 SF. Salesprojected through 2009 are off 75% in sales price and 77%in square footage. There were no significant office buildingstarts in 2009.The industrial vacancy rate is 11.6%, up from 9.3% at theend of 2008. Average asking rates are down $0.57/SF.Sales projected to year end are off 67% on price and 63%on square footage. There were no significant industrial startsin 2009.Retail vacancy is up 1.2% to 9.7%. Asking rates are up$0.03/SF to $14.33/SF. Sales of retail properties are offroughly 50% in both square footage and price. A new Costcoopened in October 2009, with Lowe's and Kohl's closebehind in the University Village Shopping Center, which isan urban renewal project with additional pads and shopspace. The investment market has been very slow with bothinstitutional and 1031 buyers primarily on the sidelines andthe TICs trying to hold their assets. Sales have been primarilyowner-users utilizing SBA financing.The base economy is solid. However, without a significantincrease in primary jobs, we are looking at a slow recoverythat is subject to the vagaries of the national economy.ContactNAI Fuller+1 303 292 3700Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage Income2,570,1772,829,7421,321,562$78,583While Denver is healthier than most markets around theUnited States, it continues to have its share of concerns.The good news is, Denver has been attracting companiesfrom the renewable energy sector, including wind and solar,and there is hope that Denver will be viewed as a good placeto conduct “green” business.Office vacancy rates have inched up over the last year withlandlords being challenged by mounting tenant occupancycosts. Operating expenses continue to increase as well,making it challenging for owners due to their lower net rents.All agree that this should lead to pent-up demand thatshould see a spike in new leasing activity towards the middleof 2010.Historically, the industrial market has enjoyed a vacancy ratebetween 6% and 7% and now it is nearing 10%. Industrialowners have resisted making tenant concessions, but as weclosed out 2009 this began to change slightly. The goodnews is there are several large (100,000 – 200,000 SF)transactions in the market, which should fill some voids thathave been created due to the downturn in the economy.Denver’s retail sector suffered in 2009. Well located retail isstill holding its own, with outlying centers suffering the most.The lack of consumer confidence has decreased retail salesmaking it difficult for some tenants to pay their relativelyhigh rents. It could be several years before the retail marketstabilizes.The investment market in Denver is virtually non-existent.The lack of financing coupled with personal recourse andlarger equity requirements by lenders have made investingin commercial real estate challenging.Job growth drives the commercial real estate market anduntil we see an increase in jobs and the stabilizationof unemployment, 2010 could be more of the samefor owners. The key will be to pay attention to costs, likemaintenance and tenant improvements, in order to minimizerisk to the owner.MedianHousehold Income$61,930MedianHousehold Income$68,140Total PopulationMedian Age35Total PopulationMedian Age37Colorado Springs At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$$$$$$$$$$N/A13.5010.0015.5012.508.503.006.009.0011.5011.0018.0018.00$$$$$$$$$$$$N/A20.0014.5018.8016.0012.505.508.5013.5025.0030.0033.0029.00$$$$$$$$$$$$N/A15.9912.7017.0014.009.754.757.759.9616.5016.5024.0023.00N/A9.1%9.5%68.0%18.5%14.4%10.3%7.9%10.9%7.7%9.2%9.3%8.2%DEVELOPMENT LAND Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential$$$$$$871,200.00172,240.00150,000.00130,000.00261,360.0020,000.00$$$$$$3,800,000.00348,480.00200,000.00261,000.00871,000.0050,000.00Denver At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICEPremium (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIAL$$$$$$30.0022.0010.0022.0016.0010.00$$$$$$35.0030.0020.0028.0023.0016.00$ 31.00$ 24.00$ 15.00$ 26.00$ 20.00$ 14.007.3%13.1%19.7%7.3%17.9%19.1%Bulk WarehouseManufacturingHigh Tech/R&DRETAIL$$$2.004.004.50$$$4.507.0010.00$$$3.504.507.007.9%11.3%10.1%DowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$$12.0013.0011.0013.00$$$$40.0030.0028.0050.00$ 25.00$ 17.00$ 20.00$ 26.009.1%10.3%11.5%7.1%DEVELOPMENT LAND Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-park$$$$20.00250,000.0080,000.0080,000.00$$$$140.00500,000.00200,000.00240,000.00Retail/Commercial Land$ 200,000.00 $ 1,200,000.00Residential$ 30,000.00 $ 180,000.002010 Global Market Report ■ www.naiglobal.com 81